The Merge was the joining of the original execution layer of Ethereum (the Mainnet that has existed since genesis) with its new proof-of-stake consensus layer, the Beacon Chain. It eliminated the need for energy-intensive mining and instead enabled the network to be secured using staked ETH.

The Merge represents the formal adoption of the Beacon Chain as the new consensus layer to the original Mainnet execution layer. Since The Merge, validators are assigned to secure Ethereum Mainnet, and mining on proof-of-work is no longer a valid means of block production.

Blocks are instead proposed by validating nodes that have staked ETH in return for the right to participate in consensus. These upgrades set the stage for future scalability upgrades, including sharding.

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The Merge and the Beacon Chain

What was the Beacon Chain?

The Beacon Chain was the name of the original proof-of-stake blockchain that was launched in 2020. It was created to ensure the proof-of-stake consensus logic was sound and sustainable before enabling it on Ethereum Mainnet. Therefore, it ran alongside the original proof-of-work Ethereum. Switching off proof-of-work and switching on proof-of-stake on Ethereum required instructing the Beacon Chain to accept transactions from the original Ethereum chain, bundle them into blocks and then organize them into a blockchain using a proof-of-stake based consensus mechanism. At the same moment, the original Ethereum clients turned off their mining, block propagation and consensus logic, handing that all over to the Beacon Chain. This event was known as The Merge. Once The Merge happened, there were no longer two blockchains; there was just one proof-of-stake Ethereum chain.

Staking

The Beacon Chain introduced proof-of-stake to Ethereum. This keeps Ethereum secure and earns validators more ETH in the process. In practice, staking involves staking ETH in order to activate validator software. As a staker, you run the software that creates and validates new blocks in the chain.

Staking serves a similar purpose that mining used to, but is different in many ways. Mining required large up-front expenditures in the form of powerful hardware and energy consumption, resulting in economies of scale, and promoting centralization. Mining also did not come with any requirement to lock up assets as collateral, limiting the protocol's ability to punish bad actors after an attack.

The transition to proof-of-stake made Ethereum significantly more secure and decentralized by comparison to proof-of-work. The more people that participate in the network, the more decentralized and safe from attacks it becomes.

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The world's second largest network in terms of market value underwent a radical change on September 15, 2022, marking one of the most important events in the world of digital currencies, the Ethereum Merge. In this analysis, the intention is to investigate the decentralization of the PoS network, as well as slashings of proposers and attesters since the Merge. What distinguishes this bounty is that it is going to explore concepts that may not have been discussed in detail on the flipside. So, before starting the analysis, the basic concepts are clarified.

Slashing

Slashing describes the process whereby other network participants forcibly eject an offending validator from the Beacon Chain while continuously draining their balance. In the most extreme cases, a slashed validator may lose their entire stake in the network.

Because validators do not want to lose their investment in resources and infrastructure, slashing ensures that network actors act in a fashion that does not harm the network.

Slashing is a mechanism put in place to enforce good behavior. It is an irreversible punishment that ‘slashes’ a percentage of an offending validator's current stake. It results in a steady loss of ETH over time until the network forcibly evicts the validator and labels them “slashed.”

Its main purpose is to reward validators who keep the network running smoothly while penalizing those who do not maintain their validation responsibilities. Slashing prevents low-effort attacks like creating contradictory forks of validators attesting to past checkpoints.

Besides misbehavior or suspicious acts, penalties can occur due to misconfigurations that could obfuscate or undermine the system's integrity.

Performance signals

An attestation on the Ethereum network made by a validator is a signature of the current slot and hash as seen by the validator. In other words, what the validator thinks the current head of the network is. Attestations are aggregated by Aggregators before being included into blocks by proposers. This process is multi-stage and multiple factors can delay it:

• The validator being late when generating the attestation due to resource issues,
• The attestation taking time to reach out to an Aggregator due to network issues,
• The aggregator itself being slow to process the attestation,
• The block proposer not catching up the propagated aggregation.

Getting Started

First, we start with general criteria such as number of slots, number of attestations, total validators, total number of deposits and total deposit amount. In general, since the beginning of Merge, nearly 395K Slots, 42.9M Attestations and 37.4K deposits have been made. Also, nearly 1.114M ETH has been deposited by 34.9K validators. The highest amount of deposit is 32 ETH, the lowest amount is 1 ETH and on average 29.8 ETH is deposited.

The graphs below show the number of deposits, new validators and deposit amount daily and accumulation since the beginning of merge. The daily charts do not show a specific pattern, but on some days like September 23, we can see that the number of deposits and consequently the number of validators and the volume of deposits have increased a lot. But in the accumulation charts, you can clearly see the growth of deposits. We can see that since the beginning of the merger, especially since October 24, the chart is advancing with a great slope.

The following charts show how many deposits, validators, and how much ETH has been deposited in each period of ETH deposited. As we can see, almost more than 86% of deposits, more than 90% of validators and more than 92% of deposit volume were related to 32ETH deposits. Also, in all the mentioned cases, deposit 16ETH has the second place.

The two charts below show how many were slashed and how many were not slashed in general and on a daily basis. In fact, slashing has happened in a very small number of slots, the percentage of which is almost zero compared to the 396.7K slots created. But if we want to see which days the most slashing happened, we can see that on September 23, 16 slashing happened, which is also a very small number compared to 7151 slots.

Conclusion

In the end, according to the results of the analyzed data and the increasing growth of deposits with an acceptable slope, it seems that Ethereum has moved much more towards decentralization.

Written by Mehdi Marjan

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